Vey v. Port Authority of New York & New Jersey

Majority

p. 221

Clarence Vey et al., Plaintiffs, v Port Authority of New York and New Jersey et al., Defendants. (And a Third- Party Action.) Port Authority of New York and New Jersey, Fourth-Party Plaintiff-Respondent, v Grand Iron Works, Inc., et al., Fourth-Party Defendants-Appellants. (And a Fifth-Party Action.)

Argued October 12, 1981;

decided November 23, 1981

p. 223

POINTS OF COUNSEL

Arthur N. Seiff and Nathan Cyperstein for Grand Iron Works, Inc., fourth-party defendant-appellant.

I. Grand Iron is entitled to contractual indemnity by Ermco. (Goodrich v Ross-Ketchum Co., 274 App Div 157 ; Witte v Maier, 256 NY 465 ; Levine v Shell Oil Co., 28 NY2d 205 ; Kurek v Port Chester Housing Auth., 18 NY2d 450 ; Liff v Consolidated Edison Co. of N. Y., 29 AD2d 665 , 23 NY2d 854 ; Mennes v Syfeld Mgt., 75 AD2d 936 ; Dillon v Riverso Constr. Co., 39 AD2d 744 , 33 NY2d 530 ; General Elec. Co. v Hatzel & Buehler, 19 AD2d 40 , 14 NY2d 639 ; Margolin v New York Life Ins. Co., 32 NY2d 149 ; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153 .) II. Grand Iron is entitled to full indemnity by Ermco on the basis of common-law tort liability. (Biss v Town of Conquest, 45 AD2d 914 ; Beliefeuille v City & County Sav. Bank, 43 AD2d 335 , 49 AD2d 323 , 40 NY2d 879 ; Panzica v Colnick, 57 AD2d 946 ; Kelly v Diesel Constr. Div. of Carl A. Morse, Inc., 35 NY2d 1 ; Rogers v Dorchester Assoc., 32 NY2d 553 ; Schwartz v Lipkin & Son, 76 AD2d 141 ; Cohen Agency v Perlman Agency, 51 NY2d 358 ; Norman Co. v County of Nassau, 63 Misc 2d 965 ; Margolin v New York Life Ins. Co., 32 NY2d 149 ; McDermott v City of New York, 50 NY2d 211 .)

Steven Di Joseph and Thomas R. Newman for Ermco Erectors, Inc., fourth-party defendant-appellant.

I. The complaint against Ermco should be dismissed since there is no evidence to support the finding that Ermco was responsible to any extent for plaintiff’s injuries. The finding of negligence against Ermco is contrary to the evidence based as it is on impermissible speculation and inadmissible opinion testimony of lay witnesses. (Schubtex, Inc. v Allen Snyder, Inc., 49 NY2d 1 ; Rochester Tel. Corp. v Green Is.

p. 224

Constr. Corp., 51 NY2d 788 ; Pollock v Pollock, 71 NY 137 ; Passantino v Board of Educ., 41 NY2d 1022 ; Schwartz v Macrose Lumber & Trim Co., 29 AD2d 781 , 24 NY2d 856 ; Lane v City of Buffalo, 232 App Div 334 ; Babcock v Fitch-burg R. R. Co., 140 NY 308 ; White v Lehigh Val. R. R. Co., 220 NY 131 ; Digelormo v Weil, 260 NY 192 ; Lyle v State of New York, 44 AD2d 239 .) II. Since Grand Iron’s liability is based solely on its voluntarily assumed contractual obligation to Port Authority, Grand Iron should not be permitted to pass on any portion of that purely contractual liability to Ermco. III. Grand Iron is not entitled to contractual indemnification from Ermco. (Allman v Siegfried Constr. Co., 49 AD2d 357 ; Grumman Amer. Aviation Corp. v International Business Machs. Corp., 77 AD2d 582 ; 67 Wall St. Co. v Franklin Nat. Bank, 37 NY2d 245 ; James Berardi, Inc. v Callanan Inds., 63 AD2d 804 ; Matter of Friedman, 64 AD2d 70 ; Ruhland v Cowper Co., 72 AD2d 907 ; Levine v Shell Oil Co., 28 NY2d 205 ; Brainard v New York Cent. R. R. Co., 242 NY 125 ; Loba v Carey, 29 NY2d 302 .) IV. Grand Iron is not entitled to indemnity from Ermco on the basis of common-law tort liability. (McDermott v City of New York, 50 NY2d 211 ; Putvin v Buffalo Elec. Co., 5 NY2d 447 ; Szarewicz v Alboro Crane Rental Corp., 30 AD2d 787 ; Storch v Moritsky, 24 AD2d 1027 ; Dole v Dow Chem. Co., 30 NY2d 143 ; Kelly v Long Is. Light. Co., 31 NY2d 25 ; Logan v Esterly, 34 NY2d 648 ; Rogers v Dorchester Assoc., 32 NY2d 553 ; Mazelis v Wallerstein, 51 AD2d 579 ; Berliner v Kacov, 51 AD2d 962 .)

William F. McNulty and Anthony J. McNulty for fourth-party plaintiff-respondent.

Questions of law are presented vis-a-vis the Port Authority and the other parties hereto.

OPINION OF THE COURT

The issue on appeal is whether a contractual provision requiring the subcontractor “to hold [the contractor] harmless and to indemnify and protect [the contractor] against all damages, claims or demands arising out of the work covered by this contract” requires indemnification when the contractor is held liable to the owner under an indemnification clause in a separate contract.

p. 225

Plaintiff Clarence Vey, an employee of Ermco Erectors, Inc. (Ermco), was injured when he fell into an open stairway while working on the construction of an addition to a bus terminal owned by the Port Authority of New York and New Jersey (Port Authority). The Port Authority had contracted with Grand Iron Works, Inc. (Grand Iron), to fabricate and erect the structural steel necessary for this addition. Grand Iron subcontracted the erection of the steel to Ermco. Plaintiffs, Clarence Vey and his wife, Minnie Vey, brought this suit for injuries and loss of services against the Port Authority, the alleged general contractor Carlin-Atlas Construction Co., Inc. (Carlin-Atlas), and against Empire City Iron Works (Empire City), the company responsible for the construction of the stairway.^[1] Third-party actions were brought by each of the defendants against Grand Iron and Ermco. All parties stipulated that the plaintiffs were to receive $1,200,000 in damages.

After a non jury trial, solely on the issue of liability, it was determined that Port Authority and Ermco were each 50% liable. Since plaintiff Clarence Vey was an employee of Ermco, he could recover only workers’ compensation benefits from Ermco, but he could recover the full amount of the judgment from the other tort-feasor, the Port Authority. (Kelly v Long Is. Light. Co., 31 NY2d 25 , 30.) The Port Authority then sought to recover over against Grand Iron on the basis of the indemnification clause in their contract. Grand Iron, in turn, cross-claimed against Ermco seeking indemnification not only on the basis of the indemnification clause in Grand Iron’s contract with Ermco but also on the basis of the common-law tort doctrine that a principal who has been held liable in tort because of the negligence of its agent is entitled to indemnification from that agent.

Supreme Court granted Grand Iron’s cross claim upon both theories. The Appellate Division modified that award by disallowing any recovery based upon contractual indemnity. The court reasoned that the Grand Iron-Ermco con

* It was held at trial, and affirmed on appeal, that no liability was proved against Carlin-Atlas or Empire City. This appeal having been taken from only so much of the order as concerned the cross claims between Grand Iron and Ermco, there is no occasion to consider those issues.

p. 226

tract did not incorporate the indemnification provisions set forth in the Port Authority-Grand Iron contract and that the Grand Iron-Ermco contract indemnification provision evidenced “no intent by the parties to be bound by an indemnification arising out of a separate contract between different parties, but only against claims 'arising out of the work covered by this contract.’ ” ( 79 AD2d 920 , 921.) The Appellate Division concluded that “Ermco therefore is liable to Grand Iron only for contribution based upon its 50% tort liability and not for contractual indemnity.” (79 AD2d, supra, at p 921.) We now modify to the extent of reinstating Grand Iron’s judgment over against Ermco.

The specific question raised by this appeal is whether Grand Iron is entitled to contractual indemnity by Ermco. Our examination of the contractual language and the surrounding facts and circumstances leads us to the conclusion that the indemnification provision in Grand Iron’s contract with Ermco was intended to require Ermco to indemnify Grand Iron for all damages incurred as a result of Ermco’s work regardless of how the claim arose.

The undisputed evidence indicates that Vey’s claim arose in connection with his work for Ermco, Grand Iron’s subcontractor for the erection of the structural steel at the addition to the Port Authority’s bus terminal. Ermco and its employee Vey were in the process of doing the contracted-for work when Vey was injured. That is precisely what Ermco had agreed to indemnify Grand Iron for — “damages, claims or demands arising out of the work covered by this contract in favor of, or happening to employees, the public or property.” The mere fact that Port Authority could seek indemnification only from Grand Iron does not bar Grand Iron from then seeking indemnification from Ermco when the original claim clearly arose during Ermco’s execution of its contract with Grand Iron.

Furthermore, the broad language of the Grand IronErmco indemnification provision evidences a clear intent by the parties for Ermco to assume all liability arising out of their work at this construction site. (Margolin v New York Life Ins. Co., 32 NY2d 149 , 153.) The provision does not specifically limit the subcontractor’s liability to his own

p. 227

acts or omissions. If it had, an inquiry would have been required to determine whether Ermco was responsible for the injury. (Lopez v Consolidated Edison Co. of N. Y., 40 NY2d 605 .) Rather, the broad language and the specific mention of employees and the public in this provision indicates an intent to indemnify Grand Iron against all claims arising out of the work Ermco contracted to perform. (Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153 .)

This interpretation is further bolstered by the undisputed facts of this case. Grand Iron was never present on the construction site, having subcontracted the erection work to Ermco. It was Ermco’s responsibility to insure that the work was done properly, that the work site was safe and that its employees abided by applicable safety regulations. The logical implication of these facts is that this indemnification provision was intended by the parties to totally indemnify Grand Iron for any liability arising from the Ermco-Grand Iron contract which was let pursuant to Grand Iron’s contractual responsibilities to Port Authority for the fabrication of the structural steel and for its erection on the construction site.

We believe the clear language of the indemnification provision, strengthened by the surrounding facts and circumstances, demonstrates that the parties intended Grand Iron to be indemnified by Ermco against all liability arising out of Ermco’s work for Grand Iron at the Port Authority’s construction site.

Accordingly, the order of the Appellate Division should be modified to reinstate Grand Iron’s judgment over against Ermco.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Order modified, with costs to Grand Iron and the Port Authority against Ermco Erectors, in accordance with the opinion herein, and, as so modified, affirmed.

Cases cited

Wills v. Maier 256 NY 465 N.Y. 1931-06-02 p. 223
Levine v. Shell Oil Co. 28 NY2d 205 N.Y. 1971-04-08 p. 223, p. 224
Kurek v. Port Chester Housing Authority 18 NY2d 450 N.Y. 1966-12-01 p. 223
Liff v. Consolidated Edison Co. of New York, Inc. 29 AD2d 665 N.Y. App. Div. 1968-01-15 p. 223
Liff v. Consolidated Edison Co. of New York, Inc. 23 NY2d 854 N.Y. 1969-01-09 p. 223
Mennes v. Syfeld Management, Inc. 75 AD2d 936 N.Y. App. Div. 1980-05-15 p. 223
Dillon v. Riverso Construction Co. 33 NY2d 530 N.Y. 1973-07-02 p. 223
General Electric Co. v. Hatzel & Buehler, Inc. 19 AD2d 40 N.Y. App. Div. 1963-06-11 p. 223
General Electric Co. v. Hatzel & Buehler, Inc. 14 NY2d 639 N.Y. 1964-03-26 p. 223
Margolin v. New York Life Insurance 32 NY2d 149 N.Y. 1973-04-25 at 153 p. 223, p. 226
Hogeland v. Sibley 42 NY2d 153 N.Y. 1977-06-16 p. 223, p. 227
Bellefeuille v. City & County Savings Bank 43 AD2d 335 N.Y. App. Div. 1974-01-31 p. 223
Bellefeuille v. City & County Saving Bank 49 AD2d 323 N.Y. App. Div. 1975-11-13 p. 223
Bellefeuille v. City & County Savings Bank 40 NY2d 879 N.Y. 1976-10-19 p. 223
Kelly v. Diesel Construction Division of Carl A. Morse, Inc. 35 NY2d 1 N.Y. 1974-07-10 p. 223
Rogers v. Dorchester Associates 32 NY2d 553 N.Y. 1973-06-08 p. 223, p. 224
Schwartz v. S. Lipkin & Son, Inc. 76 AD2d 141 N.Y. App. Div. 1980-07-21 p. 223
George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc. 51 NY2d 358 N.Y. 1980-11-25 p. 223
Norman Co. v. County of Nassau 63 Misc 2d 965 N.Y. Sup. Ct. 1970-09-08 p. 223
McDermott v. City of New York 50 NY2d 211 N.Y. 1980-05-01 p. 223, p. 224
Schubtex, Inc. v. Allen Snyder, Inc. 49 NY2d 1 N.Y. 1979-11-27 p. 223
Rochester Telephone Corp. v. Green Island Construction Corp. 51 NY2d 788 N.Y. 1980-10-07 p. 224
Pollock v. Pollock 71 NY 137 N.Y. 1877-11-13 p. 224
Schwartz v. Macrose Lumber & Trim Co. 29 AD2d 781 N.Y. App. Div. 1968-02-26 p. 224
Schwartz v. Macrose Lumber & Trim Co. 24 NY2d 856 N.Y. 1960-04-10 p. 224
Babcock v. Fitchburg Railroad 140 NY 308 N.Y. 1893-12-05 p. 224
White v. Lehigh Valley Railroad 220 NY 131 N.Y. 1917-02-27 p. 224
Digelormo v. Weil 260 NY 192 N.Y. 1932-11-22 p. 224
Lyle v. State 44 AD2d 239 N.Y. App. Div. 1974-04-11 p. 224
Allman v. Siegfried Construction Co. 49 AD2d 357 N.Y. App. Div. 1975-11-06 p. 224
Grumman American Aviation Corp. v. International Business Machines Corp. 77 AD2d 582 N.Y. App. Div. 1980-07-14 p. 224
67 Wall Street Co. v. Franklin National Bank 37 NY2d 245 N.Y. 1975-06-17 p. 224
In re Estate of Friedman 64 AD2d 70 N.Y. App. Div. 1978-08-07 p. 224
Brainard v. New York Central Railroad 242 NY 125 N.Y. 1926-02-24 p. 224
Laba v. Carey 29 NY2d 302 N.Y. 1971-11-24 p. 224
Putvin v. Buffalo Electric Co. 5 NY2d 447 N.Y. 1959-04-09 p. 224
Storch v. Moritsky 24 AD2d 1027 N.Y. App. Div. 1965-12-20 p. 224
Dole v. Dow Chemical Co. 30 NY2d 143 N.Y. 1972-03-22 p. 224
Kelly v. Long Island Lighting Co. 31 NY2d 25 N.Y. 1972-06-08 at 30 p. 224, p. 225
Logan v. Esterly 34 NY2d 648 N.Y. 1974-03-28 p. 224
Vey v. Port Authority 79 AD2d 920 N.Y. App. Div. 1981-01-08 at 921 p. 226
Lopez v. Consolidated Edison Co. 40 NY2d 605 N.Y. 1976-10-21 p. 227